Dell, AT&T get set for smart phone launch

Smart-phone analysts say they are upbeat about the prospects for mobile devices based on Google Inc.'s Android operating system.

They are less certain about whether Dell Inc. can take Android and turn it into a business jackpot for a variety of mobile products.

Dell has been selling an Android-based smart phone called the Mini 3 in China and South America since last fall. Its first U.S. phone, the Aero, hasn't showed up yet in AT&T Inc.'s stores.

The phone company has an exclusive deal with Dell in the U.S. and has pledged to start selling Dell phones before midyear.

Motorola Inc. already sells Android-based phones through AT&T, and Taiwan's HTC also is expected to offer Android phones through the phone company.

"Android is an oncoming storm," said Michael Morgan, an analyst with ABI Research. He expects Android phone makers will create phones that offer many of the same features as Apple Inc.'s popular iPhone but cost considerably less.

A growing group of companies, including Motorola, Acer, HTC, Dell and Samsung, have announced plans to make Android-based phones or other mobile products.

What's the attraction? Android's basic software is free for phone makers to use, and they can modify it to create customized user interfaces.

In addition, an active base of software developers is turning out Android applications that should run on all the new Android-based phones. The AndroLib.com Web site estimates that 9,000 new Android apps were released in March alone.

While the Android market looks promising, analysts say the jury is still out on whether Dell will become a successful smart-phone player.

"If they are really serious about getting into this market and building a big business, they are going to have to spend some serious dollars," said analyst Iain Gillott with Austin-based consulting firm iGR. "They have got to get people thinking that buying a Dell phone is a cool thing to do."

Although Dell is the world's third-largest PC maker, its record with consumer electronics has been spotty. Dell introduced a series of portable music players in 2004 and 2005, including the $99 DJ Ditty, but dropped its family of music players in 2006.

"It was an interesting effort but not a cutting-edge device," Gillott said. "They marketed it somewhat. In the end, they were giving them away, and it died in a few years. They can't do that with the phone."

Dell signaled its interest in the cell phone business in 2007 when it hired former Motorola executive Ron Garriques to run its consumer business. Late last year, Garriques become president of Dell's newly created communication solutions line of business.

Dell does have some advantages as a newcomer in the market, Gillott said: a strong global brand in computing, ties to millions of business and consumer customers, and a reputation for product value.

In AT&T, Dell also has a link to a carrier that is growing rapidly, thanks in part to its exclusive contract to carry Apple's iPhone in the U.S.

Gillott said he has talked with experts who have used Dell's Aero and have been impressed. "The people I talk to say that it is very, very slick," he said.

Some Web sites claim to have gotten their hands on an Aero, but Dell says such prototypes are not representative of the final product.

AT&T will support the Dell phone somewhat, but Dell will have to back it with strong promotions of its own, Gillott said. And the phones will have to work well and be well received by customers.

"AT&T is very demanding in terms of what they want," Gillott said. "Dell is going to have to step up here."

The Aero is Dell's first Android-based product, but analysts expect others will follow. Dell already has been showing a tablet device with a 5-inch screen that some gadget Web sites say will be called the Streak.

Dell looks at mobile devices as a natural addition to its strength in portable computers, analysts say.

"Dell looks at it as moving down the food chain" to less expensive products, Gillott said. "But Motorola and others are saying, ‘We'll move up the food chain.' "

ABI's Morgan says Dell can build a place for itself within the broader Android market if it makes the right moves.

Dell "is going to have to play to their strengths" as a maker of reliable, value-oriented products, Morgan said. "There will be space for them to play at the lower end. They don't have to offer a super-phone."